Jiangxi Synergy Pharmaceutical Co.Ltd(300636) (300636)
Key investment points
The company is a leader in high-end characteristic API with high growth rate and high certainty: the company focuses on providing high-quality and high barrier API products. The main varieties have DMF documents, and have passed multi regional GMP inspection, with the ability to quickly follow up patented API. In the short term, the release of new production capacity, the completion of technical transformation, the transmission of upstream price rise, and the large volume of new products such as tigrello will quickly repair the short-term performance; In the long run, the rapid follow-up after the expiration of the patent of new varieties of API and the large volume of cdmo business provide long-term performance support. According to our calculation, the compound annual growth rate of API revenue is expected to maintain 30% from 2021 to 2026. Cdmo business provides performance flexibility. According to the capacity estimation, the company’s revenue is likely to exceed 2-2.5 billion yuan in 2025.
Increment 1: the company has the ability of rapid imitation after the patent cliff, and the GMP production capacity helps the company grasp the opportunity: in recent years, a large number of heavy patented original drugs have expired one after another, which not only brings a large amount of generic drugs, but also promotes the rapid increase of the demand for API. The company has made sufficient project reserves, including rivaroxaban, apixaban, mirabellon, fibrostat, vigliptin, 7-methoxynaphthalone and other heavy products. Among them, tigrello passed CDE approval in March 2021 and GMP inspection in June, which will take the lead in providing high gross profit income for the company. In terms of production capacity, the newly built second plant ensures the production capacity supply of new products. Among them, the four synthesis workshops in phase I have entered the stage of equipment installation and commissioning. According to the company’s expectation, trial production can be carried out in April 2022. The production capacity of phase I plant corresponds to a revenue of 500 million yuan and phase II corresponds to a revenue of 1 billion yuan. The release of production capacity ensures the rapid growth of new varieties of the company in the future.
Increment 2: 2021 is the first year of cdmo outbreak, and the performance elasticity will be improved from 2022 to 2025: the company relies on enzyme catalysis, microchannel reaction and other technologies and GMP production capacity, and its customers include the top 20 original pharmaceutical enterprises in the world. The company has sufficient orders, 7 commercial varieties of conventional production, 17 varieties submitted for approval and under approval, and nearly 30 varieties under research. In terms of production capacity, the company has newly built part of the production capacity of the second plant for cdmo business, breaking the production capacity bottleneck at this stage. In the first three quarters of 2021, the sales of CMO / cdmo projects increased by 66.8% year-on-year, and the business began to enter the volume cycle. With the large-scale and promotion of existing projects and the expansion signed first, we expect the revenue to reach 100 million yuan in 2022, and the cdmo revenue will usher in an outbreak period, providing the company with high elasticity and high gross profit revenue.
Stock: stock varieties benefit from capacity expansion and technological transformation: the company’s old varieties have maintained stable growth. Among them, gabapentin will complete technical transformation and production expansion in 2021, and the production capacity will be expanded from 1000t to 1800t in 2022. It is expected to usher in rapid volume in 2021, and the gross profit margin is expected to rise by 15-20pct compared with 2019. Celecoxib entered the large-scale period after the downstream customers Shiyao and Baiyang won the bid for centralized mining, and there is still room for improvement; After successful registration in Japan, incremental revenue will also be provided.
Profit forecast and investment rating: we estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 88 million, RMB 151 million and RMB 261 million respectively, with growth rates of 26.1%, 70.5% and 73.3% respectively, and the P / E valuation from 2021 to 2023 will be 58x, 34x and 20x respectively; Based on the fact that the company’s new varieties of APIs are in large quantities and the cdmo business will enter the outbreak period, it will be covered for the first time and given a “buy” rating.
Risk tip: tightening of environmental protection policies; The cost transmission to the downstream is less than expected; The approval and volume of new products are less than expected; Cdmo business is less than expected; Exchange gain / loss risk.
